Managing Talent Retention

Focus Groups - The Often Overlooked Final Step

Focus groups are a wonderful resource for obtaining additional information about the cause of specific retention issues in your organization.  They allow you to gather feedback directly from those that may be affected by such issues and can be very helpful in either identifying which issues should be researched further or validating the issues identified by other data collection methods. 

They also have an additional purpose that is often overlooked by organizations, and that is to validate the solutions that are chosen based upon the information that they provided. 

Once all of the data is collected from the focus groups, and the causes of turnover have been identified, organizations set about developing appropriate solutions to address those causes.  While selecting the right solution an organization may consider long term vs. short-term costs, impact and time needed to implement a solution and perhaps even a forecast of the expected ROI of that solution.  However once the solution is chosen, a key final step prior to implementation is to present both the combined data results and proposed solutions to the focus group for their input.  This last step ensures that the solution matches the needs identified by the group, and that the needs identified at the time of the focus group are still relevant by the time the solution is developed.

Coaching as a Talent Management Solution - Does it really pay off?

While it is widely accepted that coaching programs are effective in developing talent, coaching is also an effective solution for retaining talent. And, as organizations continue to evaluate the effectiveness of their people-related strategies and programs, more coaches find they must demonstrate the real impact coaching makes to an organization. The challenge for most coaches is how to credibly measure coaching’s impact in retaining talent.  

Using an ROI approach to capture business impact can help you determine if your coaching solution retains talent and produces a pay-off and return-on-investment for your organization.  In one recent case study a global company with relatively high turnover implemented a pilot coaching program with a select group of employees who were identified as “high risk” for leaving.  The company performed a full return-on-investment analysis upon completion of the program to determine whether it should be implemented on a wider scale.  The results of that study showed that none of the participants left the company during the year that the program was conducted and the study was completed, and the program resulted in a 251% ROI.  For every $1 the company invested in the program, $2.51 was returned after the costs of the program were captured.

Turnover Costs Company 11% of Gross Profits

Ruche Media Company (RMC)* is a global media company with 24 offices located around the world.  The corporate headquarters of this $260M organization is based in a major metropolitan city in North America. Most of the 1,100 employees are based at the corporate headquarters while the remaining workforce is located in sales offices located in major metropolitan cities throughout the world.

 

After reviewing where turnover was the greatest, RMC then calculated the turnover costs. It was agreed that turnover rates, as defined by Dr. Jack J. Phillips, would be utilized to calculate turnover costs. The table below contains a list of turnover cost ranges as a percent of annual wage or salary as captured from dozens of impact studies. The data are arranged by job category, ranging from non-skilled, entry-level positions to middle managers. The ranges listed represent the cost of turnover as a percent of annual wage/salary and are rounded off for ease of use and communication. The costs represented in these studies are fully loaded and include the exit cost of the previous employee, recruiting, selection, orientation, initial training, wages and salaries while in training, lost productivity, quality problems, customer dissatisfaction, loss of expertise/knowledge, supervisor’s time for turnover and temporary replacement costs. The data in this table reflects studies in industry and trade magazines as well as practitioner publications, academic research and independent studies conducted by professional organizations and associations.

 

In order to obtain an average cost of turnover that could be used per turnover, RMC calculated the cost of turnover for each individual who left the organization during a 12-month period by multiplying that individual’s wage/salary by the median percent of annual wage/salary for the job category appropriate for that individual. The cost of each turnover during that period was then totaled and divided by the total number of individuals during that period to arrive at an average turnover cost of $116,927.09 per employee. Using this average cost of turnover, the total cost of turnover company-wide was calculated at $28.3M; almost 11% of annual sales! 

 

*Company name has been changed

Note to CFOs: You CAN trust your HR professionals!

In case you missed it, CFO magazine recently posted a story titled: Note to CFO's: Don't Trust HR. The story covered the recent address to financial executives denouncing the corporate HR profession for being mostly unable to provide analytics that are useful in making workforce decisions that build economic value. You can read the story here: http://www.cfo.com/article.cfm/13270251

My experience in working with internal HR professionals all over the world, has been different than what was cited in the review.

First, I want to make clear that not every job within the HR function should be a strategic role that requires analytics. Some jobs within HR truly are transactional and serve the purpose of executing on a strategic HR plan. If every HR role was strategic, there would be no one left to do the tactical day-to-day work. Sure, we want people to think and to consider what they are doing, why they are doing it and look for efficiences, but that is true of every job in every functional department and is not what we are speaking of with regard to using analytics to make strategic workforce decisions.

Secondly, I have had the great pleasure of traveling to conferences all over the world, meeting with HR professionals from great and small (but still great) companies and find that HR professionals are bright, thoughtful and indeed using data and analytics such as ROI to measure the impact and return-on-investment of their human capital programs.

Measuring financial impact and ROI of human capital programs is not easy, but it can be done. HR Professionals all over the world are implementing the Phillips ROI Methodology in their organization and continue to sharpen their skills in this difficult, but doable methodology.

Check out the great work at the ROI Institute, take a look at our book, Managing Talent Retention: An ROI Approach and you'll see what I mean.

CFOs, you can trust HR.